Vietnam stock market struggled for breakthroughs 

Investors should be cautious and wait for potential opportunities to emerge, rather than continuously "surfing the waves" during this period, he advised.

Immediately after the ATO session, the VN-Index dropped sharply to 1,268 points, down 15.3 points, despite recovery attempts during the session. By the close of the first session in September, the VN-Index stood at 1,275.8 points, down 0.63%.

Unfavorable Factors

During the afternoon trading session on September 3, the US stock market fell sharply as tech firms were widely sold off and dismal manufacturing statistics from the US fueled fears of an economic downturn. The August PMI manufacturing index in the United States showed that factory activity fell for the fifth month in a row. This caused a large decrease of around 3% in major technology indexes in Japan, South Korea, and Taiwan during Wednesday's session. As a result, semiconductor stocks such as Tokyo Electron, Advantest, SK Hynix, Samsung Electronics, and Taiwan Semiconductor saw significant drops.

Macroeconomic signals appear to be fluctuating significantly, which certainly affects investor mood. In addition to stock market headwinds, global oil prices have fallen below $70 per barrel for WTI crude oil, the lowest since December 2023. Concerns about the US and Chinese economies, together with OPEC's intention to boost output in Q4 2024 and Libya's prospective agreement to produce more than 500,000 barrels per day, are driving these moves. These characteristics emphasize concerns about investor trust.

In Vietnam, the August 2024 PMI index fell to 52.4, a considerable dip from July's 54.7. Although the PMI remains above 50, manufacturing activity has expanded at its slowest pace since May 2024, as new orders and output growth have stalled. This might signal that firms anticipate increasing challenges obtaining new orders in the last months of the year.

According to the State Bank of Vietnam (SBV), loan growth as of August 26 was just 6.63% compared to the end of 2023, well below the 15% objective established earlier this year. This highlights the significant hurdles firms face in manufacturing and operations.

Investor Caution

Since the steep collapse at the beginning of August, the market has shown a notable upward comeback, with the VN-Index rapidly reaching the 1,300-point level. However, certain aspects of this recovery stand out.

First, numerous large-cap companies have been supporting the market, with banks like VCB and BID leading the charge. Other equities, like GAS, VNM, MSN, and even the VIC-VHM combination, have contributed to the surge.

Second, the rebound has been uneven, with most stocks failing to achieve earlier highs, notably FPT and DGC. This is in contrast to earlier declines, in which a return to the 1,300-point level caused many companies to exceed their peaks, indicating lower cash flows during this period.

Third, FiinGroup statistics show that, excluding bank stocks, the total market value is relatively high, with many equities being regarded pricey rather than inexpensive. While bank equities are viewed as inexpensive, concerns about possible bad debt risks have hampered robust investment flow into this sector, unlike earlier this year.

Fourth, foreign investors have continued their net selling streak, marking 14 consecutive months of net sales since July 2023, particularly on the HSX exchange. The total net sale for the first eight months of 2024 exceeded 65 trillion VND, nearing the 2021 record of over 73 trillion VND. Despite efforts to upgrade the market, strong foreign net sales remain a significant pressure on the overall market.

Two Scenarios

The VN-Index has failed to reach 1,300 points four times, and the highest position in this recovery is lower than the peak in July 2024. These characteristics predict that September will not be a very positive month. The stock market in September might take one of two paths. In an ideal case, the VN-Index would oscillate between 1,230 and 1,280 points.

In this situation, financial flow is expected to circulate gradually, with no substantial breakthroughs. Many equities will adjust little, continuing a sideways or downward trend, with the exception of those that were already irregular or were struck by negative news.

The second scenario for the stock market could be more negative. This scenario would involve a combination of multiple adverse factors, both domestic and international, such as the Fed not lowering interest rates as expected, or even not lowering them at all in September. Additionally, unforeseen developments in the Middle East or the Russia-Ukraine conflict could escalate tensions significantly.